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By Emma De Vita
Sunday, 01 April 2012

Judith McKenna: The MT Interview

The COO of Asda has helped the supermarket to outperform its closest rivals, Tesco and Sainsbury's, to the delight of her bosses at the US giant Wal-Mart. In such a ruthless market, she'll need all her nous to keep the punters piling in, but only the brave would bet against her.

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I am relaxed,' Judith McKenna says unconvincingly to our photographer in the Scandi-style Asda offices on Carnaby Street. A make-up artist glides over to blot her brow and fluff her hair. When the photographer asks if she'd hold a glass of milk, McKenna jokes that it would usually be a glass of wine. Despite the smiling, she seems to be tolerating rather than relishing all this personal attention, but, as one of just a handful of very senior women in British retail, she's going to have to get used to it.

McKenna, 45, was promoted to chief operating officer of Asda last July, having spent 15 years there; a decade of them as chief financial officer. A week before the shoot, she gives MT her first full interview since her promotion. This time, it's at the squat and ugly Asda House in central Leeds. Her Wal-Mart bosses must be nervous because there are two PRs alongside her in this nondescript room. She's wearing a prim black dress and a less prim red leopard-print cardigan, which she admits are from House of Fraser and not George, Asda's clothing brand. 'Don't put that in,' she warns with a north-eastern lilt. The PRs laugh nervously.

There must be an iron fist beneath the velvet glove, because you don't get this far in such a cut-throat industry by being a pushover. Being second-in-command to CEO Andy Clarke is not a job for the faint-hearted, and she's got her work cut out as Asda tries to grow in a suffocated market. Smart and competitive, the workaholic McKenna has learnt to impress her bosses and her peers, and now she launches a relentlessly cheerful charm offensive on me.

As COO, McKenna heads all Asda's retail operations, including its stores and online, its distribution network and IT systems. Even as CFO, she had responsibilities far beyond finance, including retail development, property, construction and the smaller supermarkets. Most importantly, she had responsibility for the £778m Netto acquisition in 2010 and the subsequent conversion of its stores, which Clarke claims 'reinvented our retail future'.

But back to the morning of the photoshoot, which took place the day Tesco announced disappointing sales, instantly wiping an eye-watering £5bn off its share price. Surely it was a happy morning at Asda House? 'Do you know what, it's never like that because everybody's been there at some point,' McKenna says brightly, if not convincingly. In fact, she won't be drawn to say anything negative about Asda's fiercest rivals. 'I think they are good retailers,' she says blandly. 'At different times, each of us does different things, and some are better than others at certain times,' is another waffly statement.

McKenna says that the business had a strong Christmas; Wal-Mart later said sales grew by 1%. With its emphasis on value, Asda caters to the lower end of the market, but during these straitened times, has it seduced Waitrose and M&S refugees? McKenna looks annoyed and insists Asda has always had a broad base of customers. 'It's always one of the things that surprises people about us. I don't think there has been any specific swing between groups of people, but certainly more people have tried us and seemed to have liked what we've offered.' I suggest that Asda likes to ally itself with the working class. 'Let me phrase it a different way because I wouldn't talk about it in terms of working class,' she replies, looking uncomfortable.

Asda's core strategy is to keep prices low, though critics argue this is a dangerous thing to compete on as it's easy to emulate. McKenna refuses to entertain the idea, saying 'our whole ethos is focused on what we can do on driving our prices down, rather than what everybody else is doing'. She looks proud when she tells me that 'we are number one for price for the 14th year running and we intend to keep it that way'. Recently, Asda said that it would be putting an end to its multi-buy offers, believing that Britons are too poor to buy in bulk. But are shoppers really struggling to buy four cans of baked beans? Perhaps adopting the moral high ground is one way to take on the competition.

The strategy does seem to be working. According to Kantar market data, for the 12 weeks to 22 January, Tesco's market share dropped from 30.5% to 29.9%, while Asda's grew from 16.9% to 17.5%. Sainsbury's improved marginally from 16.6% to 16.7%. McKenna has weathered the ups and downs, proving that she has the toughness and appetite to last the course. So how did she end up rubbing shoulders with the likes of Sainsbury's Justin King and Tesco's Philip Clarke?

Raised in Middlesbrough by schoolteacher parents, she has an older sister who became a social worker. McKenna went to the local comprehensive, then studied law at Hull University. It was 'just a very normal upbringing', she explains. Not knowing what she wanted to do while waiting for law college, she moved to London and joined the graduate programme at KPMG, thinking it would give her a good start in business. She wasn't one to sketch out a career plan, confessing that 'it's much more about what you enjoy and then making the opportunities open up'.

Her first real opportunity beyond KPMG was a job in accounts for the Leeds-based Tetley Pub Company, a former client. It tested her mettle. 'It's a very big world with some very big characters,' she admits. 'And, boy, do you have to be able to stand up for yourself when you walk into a working men's club and negotiate a loan.' McKenna plays down any sexism, saying that most publicans were grateful she'd come to talk through their problems - some even cried on her shoulder. Handed an experienced team of seven, she says that one of the things she's most proud of was 'learning to be a leader and them finally respecting me to do what I did'. They still send her Christmas cards.

When Carlsberg merged with Tetley in 1993, it moved its accounting department from Leeds to Birmingham. 'The experience of seeing your entire team made redundant is eye-opening,' McKenna recalls sombrely. 'That will stay as a very live memory of my time there.' She worked hard to place many of her team over the road into Asda. Having refused to transfer to Birmingham herself ('I had a seven-month-old daughter and it wasn't right for me'), it was then that she got a call from Asda to say it liked the look of her people and would she come in for a chat? 'I said no, because I'd never wanted to work for a really big organisation,' she recalls. In the end, however, she changed her mind.

Eighteen years later, McKenna found herself dressed as Kate Middleton alongside her Prince William (Andy Clarke) at the annual Wal-Mart shareholders' meeting last summer in Bentonville, Arkansas. She was wearing an Asda knock-off Alexander McQueen wedding dress and a £4 plastic engagement ring (a product line that she boasts flew off Asda's shelves). When they appear on stage, unbelievably, some of their Wal-Mart colleagues think the pair are the real thing. Did she enjoy the experience? 'Experience is the right word for it,' she says wryly.

McKenna has been visiting Wal-Mart's Bentonville HQ for the past 12 years, since Wal-Mart acquired Asda for £6.7bn in 1999. 'Actually, it didn't feel like a takeover,' McKenna remembers. 'It felt much more like a merger, which sounds extraordinary when the world's biggest retailer has just bought you.'

She explains that after the takeover, which had been presided over by then chief executive Allan Leighton, the Wal-Mart people stood in Asda House's atrium reassuring them what a great company Asda was. 'There was no exiting of the senior team and I think that was a measure of why it didn't feel like a complete takeover.' She argues that the Wal-Mart and Asda cultures were similar - Leighton had been an admirer - and ascribes the success of the takeover to this close cultural fit.

So, what is Asda's culture like? 'It's people at the heart of the business; it's a culture of selling and of everyday low cost,' she explains. 'We have values which are: striving for excellence ...' She goes quiet. 'Oh God! I can't remember them. Keep breathing,' she jokes, as the PRs panic, clutching at their staff cards for the rest of the spiel that's printed on them. Then she adds quickly: 'Respect for the individual, service for customers,' before laughing off this gaffe. The flacks breathe a sigh of relief.

One thing's for sure, McKenna might have just had a senior moment, but you can't fault her evangelism for Asda or her dedication to her job. She returned to work just eight weeks after having her daughter (who is now 17), citing the need to earn money. Seven years later, when she had her son, she took only 12 weeks off, this time out of choice. She typically spends a couple of nights away from home a week. What's her work/life balance like now? 'I work as long as I need to work to do what I need to do,' she says with a forced smile.

McKenna's promotion to COO was an interesting one. Simon King, ex-Tesco, was brought in to replace Andy Clarke as COO when he became CEO on Andy Bond's departure in August 2010. King lasted just six months. What happened? 'Some people don't work out and I think that's what I'd say about Simon,' says McKenna, lips pressed tightly together. Why did she go for the COO job only after King's departure, and not the first time around? 'This is going to sound awful but I've never really thought of it in those terms because I've always been lucky enough with the (CFO) role that I just kept adding things to it.' It seems that her involvement with Netto whetted her appetite for something more strategic. 'I realised it was time for a change.' Although, she admits: 'It's quite scary making the jump from something you're very comfortable with.'

When she was given the job, it was generally agreed that the recent tumultuous times at Asda might finally be over. But McKenna wouldn't call them that. 'It didn't feel that tumultuous from the inside, because there has always been a level of continuity with certain people around the (top) table. And it isn't just about the top table. When you've got an organisation this size (Asda has 150,000 employees), yes, what happens around the top table is really important but, actually, it's the leaders immediately above them who are equally important.'

The biggest shock had been the departure of Andy Bond as CEO, though he stayed with Asda as chairman until January 2011. Retail pundits speculated about McKenna taking over. 'You should never believe what you read in the paper,' she admonishes. 'Andy (Clarke) was absolutely the right person for the job.' Does she ever think about leaving retail? 'After this many years, it's in my DNA, so I can't imagine anything else.' Some pundits say she's being groomed for a CEO role within Wal-Mart. Would she be interested in moving to the US? 'I'd never cross it off the list, but it's not high on the agenda.'

McKenna is clearly ambitious, though she seems surprised by this observation. 'I guess I must be because I wouldn't have got to where I am,' she says thoughtfully. 'My philosophy has always been to do the job I do to the very best of my ability and to be myself within it.'

Allan Leighton, who knows her well and went to her wedding, says: 'She's tough, very smart, and gets to the bottom of things. She's a very good retailer,' adding that he has no doubt she would be able to be a chief executive one day. It's her ability to translate the numbers into operational action that sets her apart from the rest.

McKenna is described by her boss as 'down to earth'. This she is. She is also warm, though analysts say she can be firm and disciplined. Unusually for a finance person, she is also commended for her breadth of operational experience. Despite undoubtedly being on a six-figure salary (she's shocked when I ask how much she earns), she seems to prefer high street brands to designer labels. And forget handbags, she says, her thing is for shoes. At the photoshoot, she brings along some Teresa May-inspired, leopard-print stilettos but they're from Office, not Jimmy Choo. Her olive-green dress is from Sportmax, not Chanel.

She's not big on introspection, and when asked how to describe her leadership style, she looks blank. Eventually, she says it's about being fair, balanced, open, truthful and transparent. It's also about bringing talent through and hitting performance targets. It helps that having been at Asda for 15 years, she knows a fair few faces. She thinks of herself as a hands-on leader and learnt a lot from Leighton, one of six Asda CEOs she's worked under. She last saw him only four weeks ago. 'Allan is one of the most infectiously enthusiastic people, as well as being a really strong business mind,' says McKenna fondly.

She tells a story about when she used to run the accounting teams, and would be expected to produce the sales report at 6am every Monday. Leighton would join them, feet on chair, asking what they felt about the figures. She says it made her feel valued. 'The other side to him was that he was always full of ideas. But his ability to see through problems, make decisions, be very clear about what we wanted to do, while at the same time having a really motivated workforce is part of what I learnt.'

Leighton would be proud that Asda became number two in the UK grocery market after it bought Netto. But there have been mistakes, like the failed Asda Essentials format that was meant to compete with Lidl and Aldi, and criticism of the quality of its food. McKenna says there is still growth to be had, both organically and online through Asda's three websites, George.com, Asda Direct and Asda.com. Asda later announced it will be opening 25 stores and three depots this year, creating around 5,000 jobs (though this last figure should be taken with a pinch of salt).

There are constraints to growth, however. McKenna says it's technically impossible for Asda ever to catch up with Tesco because of UK planning legislation. 'I could make your hair curl with stories about how long it's taken to get some of our stores through the planning regime - 13 years for one!' she explains.

McKenna's in London today to attend a Tickled Pink concert. It's the breast cancer campaign that Asda supports and for which McKenna is an ambassador. She ran the 13-mile Great North Run last year for the charity and if she gets any spare time she likes to squeeze in a jog. But, mostly, if she does get time off work, it's spent with her family.

If it's hectic now, what must it have been like when the children were little? She counsels women not to return to work as quickly as she did. 'Do not ever do that, because, actually, you don't need to,' she says, explaining that current maternity rights make it much easier to take time off. 'If you were good before you went, you'll be good when you come back, and good employers should recognise that.'

As for being a woman in business, 'you have to be yourself. There's no point in pretending you're a male, it just wouldn't work.' Also, do the job to the very best of your ability. 'This may mean you have a different style. You don't always have to conform to the norm.' And she's against positive discrimination for boards. 'I've never spoken to anybody who wanted to get somewhere because of their gender or their age.'

McKenna says she likes to spend her money on holidays (she took a few weeks in Majorca before starting the COO job), but otherwise seems to have no great passions in life. Her husband, whom she met at Asda, is Phil Dutton, the former financial director at struggling Punch Taverns, who left in March 2011, after the company found itself a new CEO. When asked what he does now, McKenna says awkwardly that he's having a career break. Her laughter is strained when asked if she ever turns to him for work advice. She turns instead to her Asda colleagues and others she's met on the way up.

Fifteen minutes over our allocated hour, the flacks call time. McKenna will now, no doubt, be debriefed by them. Maybe next time Wal-Mart might let her off the leash.

FOUR CHALLENGES FACING MCKENNA

Continue to trade well in a difficult time

Learn more about her new role and the areas she's responsible for

Lead and inspire a team of 150,000 people

Get fit!

MCKENNA IN A MINUTE

1966: Born in May. Attends comprehensive school, then studies law at Hull University

Further Reading

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